T Madikane: Tabling of Northern Cape Appropriation Bill of 2009

26 February 2009

Madame Speaker
Honourable Premier, Mme Dipuo Peters
Members of the Executive Council
Honourable members of the provincial legislature
Mayors and Councillors
Distinguished guests
Comrades and friends
Ladies and gentlemen

Reflecting on where it all began is always important in understanding the
happenings of today and in approaching the future. The greatest statesman and
South Africa’s moral and political leader, Tata Nelson Mandela, noted upon his
inauguration as the first President of an all inclusive democratic South Africa
that, and I quote: “The task at hand will not be easy. But you have mandated us
to change South Africa from a country in which the majority lived with little
hope, to one in which they can live and work with dignity, with a sense of
self-esteem and confidence in the future.”

Transforming South Africa into a non-racial, non-sexist and democratic
country remained the principal task of the three successive governments elected
since a decade and half ago. Our responsibility was to respond to a question
posed more than five decades ago by another late leader of the people’s
struggle for liberation, Walter Sisulu, and I quote “But what of our own
people? What of the tasks that lie before us who have to turn the decision into
living reality? Indeed, those privileged to have served in leadership are
challenged to report to the people and say this is what we have individually
and collectively done to transform your aspirations for a better life into
reality.

In this respect, this day, we table the ultimate budget of the 3rd
democratically elected government. In so doing we are guided by the principles
of continuity and change. Our statement on the budget is both the report card,
taking stock of what happened in the term of the out going government since
2004 and the transitional management tool, managing change and continuity in
governance and service delivery.

From the womb of the current government shall be borne the new
administration, with the same DNA and genealogy as those flowing in the blood
of this government. This is what we talk about when we talk about continuity.
The incoming government will, of course, assume its own independent personality
and craft its own philosophy of governance and service delivery; it will even
set new priorities and targets. This is what we talk about when we talk about
change.

Madame Speaker, we are inclined to ask once again, “but what of our own
people?”

In 2004 the overwhelming majority of the people of the Northern Cape
endorsed and entered into the people’s contract to fight poverty and create
work. Implementation of the people’s contract as profoundly expressed in all
government development policies, required maintenance of healthy finances,
budget allocations consistent with people’s preferences and efficient
management of the allocated resources. Provision of shelter, quality education
and healthcare, infrastructure development and facilitation of economic growth
required of us extraordinary measures in the light of limited public financial
resources.

In the light of the magnanimity of our task and challenges, we remained
inspired by the saying that we should never become despondent because the
weather is bad nor should we turn triumphalist because the sun shines. Indeed
we understand that ours is the responsibility to do everything possible to
improve the quality of life for all. The task of our government was
appropriately outlined by the honourable Premier during her inaugural speech in
2004, amongst other things as:
* reduction and eradication of poverty
* job creation and opportunities for all
* improving levels of skills and expertise
* deepening health-care for all
* enhancing the capacities of local governments to deliver more efficient
social services
* dealing with abuse of women and children and neglect of the elderly
* creating and enabling environment for greater participation of differently
abled people.

Today, Madame Speaker, it gives me pleasure to be able to report that the
manner in which we used resources available to us and the concerted effort and
commitment we dedicated to undertaking tasks I have just outlined have borne
fruits. The State of the Province Address delivered by the honourable Premier
reported comprehensively on the positive progress made during the term of this
government. Nonetheless, in response to the question: “but what of own people?”
it is useful to reflect on some of these milestones.

In 2007 the community survey released by Statistics South Africa found that
generally access to services improved and expanded. Amongst other things, the
percentage of households living in formal dwellings has increased from 79% in
1996 to about 81% in 2007, the percentage of households using electricity for
lighting in our province increased from 72,4% in 2001 to 87,3% in 2007. The
percentage of households that have access to piped water increased from 86,6%
in 2001 to 90% in 2007.

This day, we also publish together with other budget documents the Northern
Cape Socio-Economic Review. The socio-economic review is our own internal
assessment of progress made in the past few years and serves as a tool that
informs the proposed allocation we present to this august house. It brings to
reality Treasury’s long standing wish that the provincial budget formulation
process be informed by scientific evidence so that it can achieve the principle
of allocative efficiency.

Most importantly, the review shows that significant progress has been made
in terms of improving access and quality of services to the people of the
Northern Cape. Today, considerably more people have access to basic services
such as water, electricity, healthcare and education. Over the years the
unemployment situation has marginally improved while the province managed to
turn the tide on the negative economic growth rate of -1,7 % recorded in 2001
by recording 3,1 % growth rate in 2006. The general measure of development, the
Human Development Index, shows an improvement during the period 2000/07.

Honourable Members, at times numbers and statistics are not sufficient
indicators of the impact that government programmes have on the people. In this
respect we are inspired and encouraged that the people of the Northern Cape
have expressed their opinion on our performance since 2004. The Markinor Public
Opinion Survey Report 2004/08 on government performance finds inter alia that
our people say their happy with government work in relation to reducing crime,
promoting access to land, building houses for the homeless, delivery of basic
services, addressing educational needs of the citizenry and improving basic
healthcare.

In their honest and frank evaluation of our performance, the Northern Cape
people also encourage government to do more in terms of creating employment
opportunities, controlling inflation and the general management of the
provincial economy. We have come thus far because we understood that and I
quote “those who complete the course will do so only because they do not, as
fatigue sets in, convince themselves that the road ahead is still too long, the
inclines too steep, the loneliness impossible to bear and the prize itself of
doubtful value” (Thabo Mbeki, 2008).

Economic Outlook

Madame Speaker, despite good progress made in respect of access and quality
of services, the 2009/10 financial year budget is tabled amidst unfavourable
and difficult global economic outlook. The global financial crisis brewing for
a while became greatly visible in September 2008 with failure of several large
USA and European investment banks, insurance firms and mortgage banks
consequent to the sub prime mortgage crisis. Beginning with failures of large
financial institutions it rapidly evolved into a global credit crisis,
deflation, declines in various stock indexes and commodities worldwide.

The consequences of this sharp economic downturn are felt enormously with
the global growth forecasted at 0,5% in 2009. Major economies took the most
knock with United States of America (USA) and United Kingdom expected to
contract by 1,6% and 2,8% respectively while leading emerging economies like
China, projects 6,7% growth in 2009 which is its lowest rate since 1990. The
Sub-Saharan region is no exception, especially with effects of commodity prices
plummeting, the region is projected to slow down to 3,5% in 2009 from 5,4% in
2008.

In the mist of this financial crisis it is almost impossible for our country
to escape the fallout of the current crisis as it is intertwined in the global
economy. At the end of 2008 growth rate registered at 3,1% from 5,1% in 2007
and is further expected to slow down to 1,2% in 2009. Demand for our exports
has declined, access to finance and inflows of capital has slowed down and
there has been rapid increase in input cost. Reduction in demand leads to a
scaling down of production which has negatively affected jobs.

Our national economic outlook was further exacerbated by series of economic
shocks including electricity shortages, higher interest rates and a volatile
rand. Despite this dim outlook infrastructure investment continues to boost
sectors like civil construction. The agricultural sector has also performed
better in response to higher prices and better rains. Although the South
Africa’s economy has taken a severer battering recently it is better placed to
weather the storms with its sound macro-prudential framework. On the positive
side, the banking system looks healthy and inflation, in double digits for most
of last year, is projected to sink to under 6% by the end of 2009.

Like the national economy the Northern Cape economy has been exposed to the
full wrath of the global crisis. Manufacturing, mining and the retail trade,
which together account for more than one-third of the provincial Gross Domestic
Product (GDP), are already struggling. Although we don’t have the most recent
actual economic growth rate data of the province, we can report that it was
forecasted to slow down to 2,1% in 2007 from 3,1% in 2006. Despite the
challenge in the Northern Cape’s economic progress the provincial government
continues to implement the initiatives aimed at accelerating economic growth
and development as well as fight poverty and create work. The economy created
jobs at an average rate of 2,6% between 2000 and 2007.

Financial management

The beginning of the term of our government was marred by a number of
challenges relating to weak fiscal discipline in most areas. Lack of requisite
skills in financial management, commitment to sound fiscal practice and
discipline as well as more efficient management of state resources were some of
the pressing issues that required immediate attention of government. They
required our undivided attention because over expenditure and under-expenditure
as well as inefficiency impact negatively on the ability of government to
deliver services and improve quality of life for our people.

The measures instituted included stringent fiscal discipline and saving
mechanisms to control expenditure and to ensure more efficient utilization of
state resources. Concomitantly, provincial departments and entities were
assisted in building capacity for efficient, effective and transparent
financial management. Throughout this period we remained resolute that the
challenges facing our province with regard to poverty and unemployment as well
as limited state resources, obliged us not to tolerate unauthorised, irregular,
fruitless and wasteful expenditure.

Today, Madame Speaker, we are able to report that apart from challenges in
certain quarters, financial management in the province has generally improved.
Amongst other things most departments have improved their spending as evident
in the fact that actual Provincial Expenditure as at 31 December 2008 amounted
to R5,385 billion or 76% of the total provincial adjusted budget of R7,062
billion.

Exactly what is the cash flow position of the province? The media has
reported what sells their newspapers, and that is, that the Northern Cape
Province is bankrupt. Such statements are intended to unsettle the minds of
employees of provincial government as well as the general public. Employees
wonder whether they will receive their salaries or wages on the pay day.
Service providers wonder whether to continue extending credit to government.
The general public wonders whether government service delivery machinery will
provide houses to the homeless, health care to the sick, school children wonder
whether the national school nutrition programme will provide them with meals
the next day, the black emerging farmer wonders whether the starter pack
promised will actually be delivered, and the commercial farmer ponders whether
the assistance for his drought stricken farm will ever be made available to pay
the “ Kooperasie” from which he bought on credit the fertiliser.

I would like to assure this house that the Northern Cape Government is not
bankrupt. We will continue to discharge our obligations towards our employees,
we will continue to build houses, feed school children, provide the emerging
farmer with the starter pack, and assist those commercial farmers affected by
drought. Madam Speaker, when you have ten children and one of them is sick, you
do not stand on top of the mountain and tell the whole world that your children
are all sick, but you find out who of the ten children is actually sick and
find out what is the cause of the sickness. Having established the cause of the
sickness you then decide on the appropriate treatment to help the child to
recover.

Madam Speaker, the following are facts:

During October 2008 budget management review almost all departments
indicated that they will collectively overspend their budgets by R664 million,
80% or R528 million was attributed to the social sector. To ensure that the
province remains liquid, all departments were directed to curtail projected
over expenditure without necessarily affecting services delivery.

Such over expenditure if allowed would have resulted into an overdraft of
more than R860 million which would have caused unmanageable cash flow problems.
As part of ensuring that departments do not cause unmanageable cash flow
problems, departments were directed to synchronise their payments with the
national payment schedule that sets out when the different amounts will be
received by the province whether being equitable share or conditional grants.
This process though painful to departments was necessary in order to stabilise
cash flow management.

During the payment synchronisation process it became clear that some
departments were feeling the synchronization pain much more than others. Where
the synchronisation pain lasted more than the initial planned period of three
weeks, Provincial Treasury intensified budget interrogation processes further
and found that Department of Education was the sick child I referred to earlier
on. The sickness in the Department of Education is not the cash flow
synchronisation pain but management. Extensive work by Provincial Treasury has
been done in this regard to determine the extent of the pain. A strategy has
been agreed upon to address the identified weakness that perpetuates the
challenges.

Madam Speaker, I would like to assure this house, the teachers and office
based employees of the Department of Education, as well as the service
providers that the situation as far as the finances of the department are
concerned is under control. Office based employees were paid on 13 February
2009, teachers as well as those who will receive their salaries tomorrow will
be paid. Office based employees will be paid again on 13 March 2009; teachers
will be paid again on the last day of March 2009. Service providers will also
be paid on the basis of first in first out principle which implies that those
who are owed the longest will be the first to be paid after proper verification
and reconciliation of outstanding amounts.

Madam Speaker, the prophets of doom in 2004 said that we were bankrupt; in
2009 they have come back again to say that we are bankrupt. The question that
the prophets of doom must answer is; how did we survive the last five years if
we were bankrupt?

Honourable members, as indicated earlier that at the beginning of the term
of our government, we had a number of challenges including lack of the
requisite skills in financial management as a result of which Provincial
Treasury was unable to prepare consolidated annual financial statements for
departments and public entities as well as annual financial statements for the
Provincial Revenue Fund. Today I can proudly report that the situation has
changed.

During this term of government, Provincial Treasury has been able to build
the required capacity that has enable it to address the backlog of preparing
consolidated annual financial statements for departments and public entities.
These consolidated annual financial statements of departments and public
entities were subjected to agree upon procedures by the Auditor General and in
all the five years of backlog, the Auditor General was satisfied with the
consolidated financial information as presented by Provincial Treasury. No
opinion is expressed by the Auditor General on the consolidated financial
statements in terms of the agreed upon procedures.

Indeed, Madam Speaker, financial management has improved during the term of
office of this government. This is evidenced by the fact that despite it not
being a legal requirement, Provincial Treasury in its quest to promote and
enforce transparency and effective management in respect of revenue,
expenditure, assets and liabilities of provincial departments and public
entities, it initiated the process to audit the Provincial Revenue Fund for the
last five years. The outcome of this audit surprised many. The Auditor General
expressed a favourable audit opinion for all the five years that were audited.
In other words for all the five years that were audited the audit opinion was
unqualified. This is a clear reflection that the finances of the province are
in good hands, that Provincial Treasury is hard at work in ensuring that
provincial financial funds are well managed.

Madam Speaker, last year we reported that the Office of the Accountant
General has been undergoing restructuring and transformation. We can now report
that the Provincial Accountant General hit the ground running. This is one of
those areas where Provincial Treasury did not have the capacity in the past.
The restructuring and transformation of the Provincial Accountant General’s
office has enabled Provincial Treasury to assist not only provincial
departments to improve their audit outcomes but this assistance is also
provided to municipalities to improve their audit outcomes.

Planned strategic intervention will address concerns raised by the auditor
general and to improve provincial audit outcomes. Continued support and
assistance will be provided to provincial departments, public entities and
municipalities through targeted training on public finance management to
existing financial practitioners.

Madam Speaker, let me remind this house what we reported last year around
the accumulated unauthorised expenditure inherited from the previous
government. What is important in this regard is that we are not only going to
hand over new debt to the new provincial government but we will also hand over
a strategy tried and tested over the last five financial years together with
the resources to deal with the new debt which resulted from accumulated over
expenditure of the Department of Health.

The current Executive Council inherited from the previous Government
unauthorised expenditure amounting to R845,6 million at the beginning of the
current term of office. By the end of the 2004/05 financial year, the province
had managed to reduce this debt by R414,8 million or 49%. This was made
possible by the decision of the Executive Council which directed that any
unspent funds surrendered to the Provincial Revenue Fund should not be used to
increase departmental expenditure but be utilised to reduce the debt inherited
from the previous government. At the end of the 2004/05 financial year, the
unauthorised expenditure had a balance of R430,8 million. During the same
period the Executive Council resolved and adopted a debt redemption strategy
that required the Executive Council to set aside each year of the Medium Term
Expenditure Framework (MTEF) starting from 2006 an amount not less than R80
million to finance accumulated unauthorized expenditure with the proviso that
no department overspends its budget.

An amount of R168,8 million was set aside in 2005/06 to further reduce the
accumulated unauthorised expenditure of the previous financial years. However,
it is unfortunate that Standing Committee of Public Account (SCOPA) did not
consider the unauthorised expenditure during that period. This amount would
have further reduced accumulated unauthorised expenditure from the balance if
R430,8 million to R262 million.

During the 2004/05 financial year the Executive Council resolved and
implemented management budgets to address pending overspending in the
department of Social Services and Population Development. This resulted in all
departments remaining within their budgets except the Department of Health that
overspend by R16,4 million for the 2004/05 financial year.

During the 2005/06 financial year only the Department of Health overspend
its budget by R76,3 million and the 2006/07 budget by R187 million. To this end
Executive Council has resolve that the Department of Health must be placed
under administration and that Provincial Treasury should establish the exact
causes of over expenditure in the Department of Health and recommend measures
to be endorsed by Executive Council.

To finance this over expenditure by the Department of Health will require a
new strategy. Provincial Treasury has been tasked to develop alternatives that
will not affect adversely the service delivery. In reality had the Department
of Health not continuously overspend its allocated budget the debt redemption
strategy would have ended during the 2007/08 financial year. This would have
enabled the Executive Council to allocate the much needed resources to pressing
policy imperatives.

I am more than happy to announce that the Finance Bill in respect of R168,5
million has been passed and assent into law on 11 December 2008. Provincial
Treasury is currently dealing with administrative issues in this regard. I must
further report that SCOPA is currently deliberating on the balance of R262,2
million which I have already mentioned above. Once approved, this process will
wipe off the old debt.

Madame Speaker, we must note that unfortunately addressing the problematic
areas in the Department of Health as per the administration process have not
moved as smoothly as we anticipated. Perhaps we must be reminded that and I
quote “Those who complete the course will do so only because they do not, as
fatigue sets in, convince themselves that the road ahead is still too long, the
inclines too steep, the loneliness impossible to bear and the prize itself of
doubtful value.” Therefore, the Provincial Treasury will continue with
endeavours to address the challenges in the Department of Health.

Madame Speaker, the Constitution of the Republic provides that national,
provincial and municipal budgets and budgetary processes must promote
transparency, accountability and the effective financial management of the
economy, debt and the public sector. Transparency remains one of the
cornerstone of our democracy hence our budgets must give expression to this
principle.

In 2006 the Provincial Treasury was tasked by the Executive Council to
deepen political participation in the budget preparation process and to provide
budget technical assistance to the Portfolio Committee on Finance. It is
through this process we seeked to achieve the notion of allocative efficiency
which relates to existence of adequate capacity to ensure that resources are
deployed in line with the priorities of government.

In addition, last year during the Adjustment Estimates, Provincial Treasury
tabled for the first time, the Provincial Medium Term Budget Policy Statement.
By tabling the PMTBPS we aimed to inform stakeholders about the thinking of the
provincial administration and how resources will be allocated to advance
identified priorities for the 2009/10 financial year. It gave effect to our
quest to make the budget process transparent and facilitate public
participation in government planning processes. These and other measures have
ensured that the budgets we table are not only credible but also conform to the
broad developmental agenda of the government elected by the multitudes of
Northern Cape residents in the 2004 general elections.

Madame Speaker, who would have thought that other than building capacity for
financial management, Provincial Treasury would have also build capacity to
engage in economic and social research? This demonstrates the capacity of
Provincial Treasury to go beyond financial management in its quest to
understand the situation on the ground that informs budget allocations.

Infrastructure development

Honourable members, special attention has been awarded to infrastructure
delivery to ensure that infrastructure allocations are spent correctly and the
intended output is delivered. The importance of infrastructure development lies
not only on its job creation capability and social impact but also in
strengthening participation and inclusion of those trapped in the second
economy.

Our commitment to infrastructure development as a vehicle for economic
growth and job creation is demonstrated by the fact that since 2004/05 a total
amount of R3,252 billion has been spent on infrastructure. The total
infrastructure budget for the province amounts to R4,163 billion, over the
MTEF. Included in the total infrastructure budget is the Infrastructure Grant
to Provinces (IGP) which amounts to R1,761 billion over the MTEF.

Apart from allocating money, the provincial government continues to make
considerable efforts to improve Infrastructure Delivery Processes. Amongst
other things the Infrastructure Delivery Improvement Programme (IDIP) which was
designed to help address challenges relating to capacity of delivery processes
including skills, systems and governance was implemented in the immovable asset
intensive departments, namely the Department of Transport, Roads and Public
Works, the Department of Education and the Department of Health. This long term
programme has helped identify and address deficiencies to effective and
efficient delivery of infrastructure.

Although this programme has been implemented a number of challenges remain
particularly the lack of forward planning, poor alignment of the planning and
budgeting cycles for infrastructure projects, insufficient life cycle costing
and inadequate assessment of infrastructure plans and budgets. It is self
evident that failure of infrastructure services has dire consequences for
social and cultural development, sustainable poverty alleviation, effective
environmental management and long term economic growth.

We have impressed upon this house in the past the importance of maintenance,
while there has been much emphasis on “delivery” of infrastructure, it should
be noted that delivery does not end with the commissioning of that
infrastructure asset. Delivery needs to be universally understood as embracing
not only constructing the infrastructure, but the appropriate operation and
maintenance of that infrastructure throughout its intended life. If the
appropriate infrastructure services have been provided and these services are
effectively managed, they promote economic growth, equity, access to services,
sustainable social and cultural development, effective environmental management
and sustainable job creation.

Infrastructure maintenance must therefore be regarded as a strategic tool to
promote improved service delivery, to unlock funding to extend infrastructure
to historically disadvantaged communities, and to support the province’s
economy. It is the primary means of ensuring that life cycle expenditure on
infrastructure remains in the province. Maintenance of existing assets should
therefore not be seen as being of secondary importance to the apparently more
attractive prospect of new infrastructure.

Fiscal framework

Madame Speaker, the budget process is characterized by contestation for
resources by different departments and public entities. Resources are not
always available to fund the priorities identified by sector departments. Often
than not departments are forced to reprioritize within available resources and
more efficient use of available resources remains a rule.

Today we table a total budget of R7,9 billion for the province for the
2009/10 financial year. This amount includes R1,8 billion in the form of
conditional grants and R141 million in provincial own receipts. Since the
tabling of the 2008 Medium Term Budget Policy Statement, both the global
economic environment and the domestic economic outlook have deteriorated
significantly. One of the consequences of this deterioration is that revenue
growth has slowed faster than anticipated. In addition, conditions for emerging
markets to raise debt have also worsened considerably.

In order to mitigate the impact on government’s fiscal position and to
increase the policy scope for responding to this economic crisis. In this
regard the Minister’s Committee on the Budget has approved spending reduction
across provinces over the next three years. This reduction was finally endorsed
by the Budget Council. Accordingly, the Northern Cape’s Provincial Equitable
Share has been reduced by R54 million in 2009/10 financial year, R67 million
and R81 million in the 2010/11 and 2011/12 financial years respectively. As a
result the new debt redemption strategy will have to be extended over a longer
period, mainly because the unallocated portion that was meant to increase the
new debt strategy allocation had to be redirected to cushion the impact of the
baseline reduction indicated above.

Allocations

Madame Speaker, let me take this opportunity to elaborate on departmental
allocations for the 2009 MTEF period. It should be noted henceforth that our
budget priorities continue to be characterised and informed by a pro-poor
spending pattern to broaden access to basic services such as education, health
and housing for the poor.

In this framework consideration has also been given to the economic sector
departments to deal with the economic challenges in the province and give
credibility to our provincial budget process insofar as the policy priorities
are concerned. Madame Speaker, obviously not all provincial priorities could be
funded as a result of limited resources and not withstanding our Debt
Redemption Strategy and obligations.

Our funded policy priorities emanates from a rigorous process of
consultation and engagement in the Provincial Medium-Term and Expenditure
Committee (PMTEC) and the MEC’s bilateral that took place subsequent to the
process of the PMTEC meetings, and as such we can conclusively attest to each
individual priority that has been funded as a result.

Social Services Sector

Madame Speaker, the poverty levels in our country and the morally repugnant
and social destructive forms of social inequality based on factors such as
class, gender and ethnicity necessitates that unashamedly and unapologetically
government prioritise social services. Accordingly, in the current budget cycle
we seek to expand and improve quality of health and education services through
various national and provincial policy interventions.

In this respect, the Department of Education’s major priorities in the 2009
MTEF is to improve access and quality of education. Areas such as Early
Childhood Development, Adult Basic Education, Further Education and Training
are expected to contribute to the social capital development, benefiting all
the citizens of the Northern Cape. Furthermore, the provision of basic
infrastructure to schools such as clean water, decent sanitation, and
electricity as well as speedy delivery of classrooms continues to be a key
policy thrusts.

Development and maintenance of high quality and efficient education system
that contributes to expansion of the skills base is not only critical fighting
poverty but also for growth and development of the economy. Our commitment in
this respect finds expression in the proposed allocation that includes
conditional grants amounting to R2,9 billion for the 2009/10 financial
year.

An additional amount of R55 million over the MTEF has been allocated to
reduce the teacher: learner ratio in quintile 1 schools. Inflation related
increases over the MTEF of R9,2 million are made to protect the value of real
spending on learner support material. Further additional allocation is intended
to provide for extension of no fee schools in quintile 3 learners and making
public ordinary schools more inclusive an amount of R56,4 million in the two
outer years has been provided for in this regard.

Education’s share in respect of the Infrastructure Grant to Provinces (IGP)
amounts to R354,4 million over the MTEF. This figure consists of R24,7 million
over the MTEF to address inflationary adjustments, R53,5 million earmarked in
the two outer years of the MTEF to deal with school safety infrastructure, and
R11.6 million in the two outer years to address Grade R infrastructure.

Department of Health is allocated a total budget amounting to R2,2 billion
including conditional grants. Given the difficult economic situation world over
provision is made for Inflation related increases over the MTEF of R53,7
million to protect the value of real spending on medical goods and
services.

In addition to the allocation in the baseline for nursing OSD, an additional
R88,5 million has been allocated over the MTEF to provide for the shortfall and
carry through cost for nursing OSD. An additional allocation of R48,3 million
over the MTEF has been provided for reducing maternal and child mortality while
Extreme Drug Resistance (XDR) and Multi-Drug Resistance (MDR) Tuberculosis
receives R12,6 million and an allocation of R37,6 million is made in respect of
general capacity in the health sector particularly for primary healthcare
services. In respect of the Infrastructure Grant to Provinces an amount of R220
million is provided over the MTEF.

Madame Speaker, proposed allocations to the Department of Social Services
and Population Development seeks to give impetus to the enhancement of social
welfare to the citizens of this province to ensure the greatest impact on
poverty alleviation. The total budget for this department amounts to R407
million for the 2009/10 financial year.

The priorities for the Department of Social Services and Population
Development include extending Early Childhood Development, expanding secure
care services to Children in conflict with the law and strengthening access to
home and community-based care. In this respect an additional allocation of
R13,4 million has been allocated to the department to provide for the extension
of Early Childhood Development (ECD) in the 2011/12 financial year.

The Department of Sports, Arts and Culture 2009 MTEF priorities relates to
FIFA 2010 World Cup initiatives, sport development, promotion and preservation
of heritage and libraries transformation. The province has developed and
implemented specific initiatives aimed at ensuring that it is ready for FIFA
2010 World Cup. More focus will be on increasing and expanding the diversity of
the tourism market, infrastructure upgrades and development.

In this respect the department of Sports, Arts and Culture is allocated an
amount of R177 million for the 2009/10 financial year. This allocation includes
R78 million in conditional grants in respect of the Community Library Services
and Mass Sport Recreation Participation Programme grants.

Economic sector

Madame Speaker, former President Thabo Mbeki once reminded as to what should
constitute budget of a developmental state. He argued that the thrusts of such
budget constitute a balance between two elements. These relates to how much the
state spends fighting poverty and deprivation? And how much of the country’s
resources go towards expanding the economic opportunities of all citizens?
Today we still grapple with this notion because as much we need to fight
poverty there is an equally important need to grow and develop the provincial
economy.

Marginal increases in the budget of the economic cluster seeks to
incremental arrive at the balance referred by former President Mbeki.

The Economic cluster remains focused on championing the implementation of
initiatives to grow, transform and diversify the provincial economy as well as
integrated infrastructure investment to support economic growth and
development. Land and Agrarian Reform Initiatives, implementation of the
Northern Cape Diamond Strategy, economic and social infrastructure development
and delivery of houses are some of the key issues on the programme of the
Economic cluster. In the 2009 MTEF the policy priorities include initiatives to
accelerate economic growth and development, as well as integrated
infrastructure development and maintenance.

In terms of departmental allocations, the Department of Economic Affairs is
allocated an amount of R121 million for the 2009/10 financial year. In respect
of its mandate and policy priorities an additional amount of R2,4 million has
been allocated in the 2011/12 year to stimulate economic growth in the
province.

The target to provide adequate infrastructure for economic growth and
development as set out in the PGDS is primarily driven by the Department of
Transport, Roads and Public Works. Integrated infrastructure investment,
Expanded Public Works Programme, and implementation of the Public Transport
Strategy are the key priorities for the department in the 2009 MTEF.

In this respect the Department is allocated an amount of R738 million for
the 2009/10 financial year. An additional amount of R6,3 million has been
allocated in the 2011/12 year for the rehabilitation and maintenance of roads.
The department also receives two new conditional grants in respect of Expanded
Public Works Programme Incentive grant and Public Transport Operations
grant.

The EPWP grant is aimed to increase labour intensive employment through
programmes that maximize job creation and skills development. A once off amount
of R500 thousand has been allocated in the 2009/10 financial year. The Public
Transport Operations Grant is introduced to allow for improved monitoring and
control of expenditure related to bus subsidies and other transport operations,
a once off amount of R22 million has been allocated in the 2009/10 financial
year.

Madame Speaker, the department of Agriculture and Land Reform is charged
with the responsibility to lead in the development of the agricultural sector
and contribute towards the improvement of livelihoods in the province, by
ensuring equitable access and participation in the agricultural value chain,
improving global competitiveness, promoting sustainable use of natural
resources and ensuring food security. The policy priorities in the 2009 MTEF
include land and agrarian reform project initiatives, commercialisation of
goats and food security

The department’s allocation including conditional grants amounts to R250
million for the financial year 2009/10. An amount of R80 million is allocated
in the form of conditional grants that include comprehensive Agricultural
Support Programme, Agriculture Disaster Management, Land Care Programme,
Infrastructure Development and Illima/Letsema Projects. In respect of
Infrastructure Grant to Provinces an additional amount of R2 million over the
MTEF is earmarked for specific economic intervention in the agriculture
sector.

In Housing and Local Government the focus remains to promote and facilitate
sustainable, integrated human settlements and infrastructure development for
effective service delivery. Key priorities for the department are provision of
houses and sanitation as well as implementation of the Five Year Strategic
Agenda. In the 2009/10 financial year the Department is allocated an amount of
R520 million including conditional grants. This includes an amount of R325
million in respects of Integrated Housing and Human Settlement Development
Grant. Included in this amount is a significant increase of R114 million to
accelerate delivery of houses in the province. Furthermore an additional of R52
million has been redirected from North West Province to our province to deal
with incomplete houses in Kgalagadi.

The PGDS identified development of the Tourism industry as a priority
because of its potential to diversify and grow the provincial economy as well
as create employment opportunities. Furthermore in light of the imminent FIFA
2010 World Cup, the province must be better positioned and exposed to ensure
that it benefits from opportunities related to this event. For this purpose the
Department of Tourism, Environment and Conservation is allocated a total budget
amounting to R106 million for the 2009/10 financial year. An additional
allocation of R2 million in the 2011/12 year has been allocated to promote
Tourism in the Province.

Governance sector

The governance and administration cluster endeavours to promote greater
cooperation between all departments and municipalities by co-ordinating and
implementing integrated and coherent provincial and local economic development
strategies. Building capacity of the state, social cohesion and moral
regeneration initiatives are some of the key areas of focus in this
cluster.

In this sector the Office of the Premier is allocated an amount of R137
million for the 2009 financial year, the Provincial Legislature receives R92
million, while Safety and Liaison is allocated an amount of R95 million. In
this sector no additional allocations have been except provision for
inflationary adjustment and Improvement in conditions of service.

Conclusion

Therefore as far as we are concerned there is no contradiction and there is
no crisis of transition, for we believe in the principle of continuity and
change. This budget is the testimony to the fact that we intend to hand-over,
as this outgoing government, to the incoming government, a working
administration. This is continuity.

But the budget will be flexible and open enough to address some, if not most
of the new priorities, and that already talks to the principle of change. To my
colleagues who may not return to the Legislature and Executive I say heed the
words from a poem by Max Ehrmann titled “Desderata”

“Go placidly amid the noise and haste, and remember what peace there may be
in silence. As far as possible, without surrender be on good terms with all
persons. Speak your truth quietly and clearly, and listen to others, even the
dull and ignorant, they too have their story.

Avoid loud and aggressive persons; they are vexations to the spirit. If you
compare yourself with others, you may become vain and bitter, for always there
will be greater and lesser persons than yourself. Enjoy your achievements as
well as your plans.”

“Nurture strength of spirit to shield you in sudden misfortune. But do not
distress yourself with imaginings. Many fears are born of fatigue and
loneliness. Beyond a wholesome discipline, be gentle with yourself.”

To the incoming Legislature and Executive I have this advice, also taken
from Desiderata

“Keep interested in your own career, however humble, it is a real possession
in the changing fortunes of time. Exercise caution in your business affairs,
for the world is full of trickery. But let this not blind you to what virtue
there is, many persons strive for high ideals, and everywhere life is full of
heroism.
Be yourself. Especially, do not feign affection. Neither is cynical about love,
for in the face of all aridity and disenchantment it is perennial as the grass.
Take kindly the counsel of the years, gracefully surrendering the things of
youth.”

My sincerest and heartfelt appreciation goes to the Honourable Premier Me.
Dipuo Peters for her immeasurable support. Any achievement made in this term of
government was due to her wisdom and uncompromising leadership. The collective
support and dedication of the Members of the Executive Council is hereby
commended and appreciated.

I must also thank the Heads of Department and Chief Financial Officers for
ensuring that the Provincial Treasury receives the necessary information and
documentation thereby assisting to table a credible budget. Recognition must
also go to officials of the Provincial Treasury who laboured diligently and
meticulously to ensure that the budget is tabled correctly.

Madame Speaker and Honourable members I commend to you:
* the Northern Cape Appropriation Bill 2009
* the Budget Statement for the 2009/10 MTEF which takes into account estimates
of revenue and expenditure
* general notice of allocation to municipalities
* the Northern Cape Socio-economic Review 2008

Thank you!

Issued by: Department of Finance, Northern Cape Provincial Government
26 February 2009